Too Many Options: $FB, $VZ, $NVDA, $MU, $TMUS, $USO

by Enis February 24, 2014 6:40 am • Commentary

The CBOE composite put/call ratio hit its lowest level since mid-January, closing at 0.69.  Facebook calls were by far the most active lines in single stock options.

1.  FB – The March 70 calls traded over 80k on the day at an average price of $2.98.  Open interest was only around 45k prior to Friday.  The April 75 calls were the second-most traded line, with over 60k trading at an average price of 2.50.  Call/put ratio in FB well over 2 throughout the past month.  30 day implied vol hit its highest level since prior to January earnings, around 42.

2.  VZ – Trader sold 40k of the April 49 calls for 1.05 in the morning.  30 day implied vol moved to 23.50, its highest level in more than 2 years.  VZ had its highest weekly volume in the stock since August 2011, trading over 175 million shares last week.  Friday’s daily volume was the highest since June 2012.  The Vodafone acquisition closed on Friday, which likely resulted in a good amount of merger arbitrage-related volume.

3.  NVDA – Dan detailed the unusually large call volume in NVDA in Friday’s CotD post.  Trader bought 15k of each of the June 16, June 17, June 18, and June 19 calls.  That was almost 10x the average 1 month call volume, and call open interest increased by about 50% as a result.  If all of those calls were exercised, the 6 million shares would equal a bit more than 1% of NVDA stock (568.5 million shares outstanding).

4.  MU – Options volume was around 4x the average 1 month volume.  The Feb28th expiry in-the-money calls (22.5, 21.5, and 23.5 lines) all traded more than 30k on the day.  Also, a looks like a different trader setting up for earnings, as the April4th puts were quite active, with the Apr4th 25.5, 26, and 26.5 puts all trading for more than 15k.

5.  TMUS – The May 26/29 risk reversal traded around 20k at an average price of 3.70 (call over put).  TMUS held its support around 29-30 on the most recent selloff.  The 2 year high for the stock is the December high at $34.10.  Current speculation in TMUS centers around a potential bid for the company by Softbank, the Japanese company which bought Sprint last year.

6.  USO – The WTI crude oil ETF hit its highest level since October last week.  There was a morning seller of 20k of the April 38 calls at 0.37.  USO last traded above $38 in September.